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The sun that gives Houston its famous heat also will bring it power beginning next year as NRG Energy starts generating electricity at a solar plant it will build in northwest Houston.

Under a 25-year proposed agreement being announced today, the city of Houston will buy power for its buildings from the plant, which will be the largest solar plant in Texas when it's completed in July. Its 10-megawatt capacity — which will be online only during daylight hours — will provide up to 1.5 percent of the city government's power needs.

NRG, which won the contract to build the plant through a bidding process, will front the $40 million to build the plant on 70 acres of land at the site of the existing T.H. Wharton power plant near Texas 249 and North Beltway 8. The plant will use thin-film photovoltaic solar panels manufactured by First Solar Inc.

The city will pay 8.2 cents per kilowatt hour for the first year of the contract, but that can change over time and will be based on a combination of factors. For example, the contract prices solar power at 19.8 cents per kilowatt hour, but what the city pays will incorporate lower-price natural gas power when the sun isn't shining.

The solar plant also will give the city renewable energy credits, but it will retire them rather than trade them.

“Houston always talks about being the energy capital of the world, but we'd like to see it transformed into the energy conservation and renewable capital,” said Issa Dadoush, director of Houston's General Services Department.

The 10 megawatt project is modest compared to most commercial electric generating projects. A commonly used natural gas-fired turbine generates about 180 megawatts, and the adjacent Wharton plant's capacity is 1,025 MW.

But the new plant is similar to many new solar projects that cities and utilities around the country are considering.

Other plants

CPS Energy, San Antonio's municipally owned utility, signed a deal this summer for a 14 MW solar plant to be finished by the end of next year.

Austin Energy signed a deal with a solar power plant developer this month to build a 30 megawatt plant. That facility should be up by December 2010 , a spokesman said.

And Southern California Edison is planning two large solar projects with a combined 550 MW outside of Los Angeles for startup in 2015.

But the projects are not without controversy. Solar-generated power costs more than other kinds despite the free fuel source. In Austin some businesses and residents expressed concern over estimates that getting more power from renewables, including wind and solar, could increase bills by 22 percent by 2020.

The NRG contract must be reviewed by the city's fiscal affairs committee before it is brought before the City Council for approval.

Although Houston is known as the home of the oil and gas exploration business, the city government has tried to burnish its green energy credentials. Houston has a long-term deal to purchase 32 percent of its power — about 50 MW — from wind farms in Texas. It is also expanding an energy efficiency program by tapping into more than $23 million in federal stimulus funds for weather-proofing low-income residents' homes.

The city got the idea for the solar project when electricity prices spiked after Hurricanes Rita and Katrina damaged Gulf of Mexico natural gas production and processing sites. That boosted the price of natural gas, a generating fuel that helps set the price for electricity in Texas and other states.

“We had a vision for more diversity of power that was friendly to the environment,” said Dadoush.

For NRG the project is part of its effort to diversify. Most of the 24,000 MW of power the company produces comes from coal or natural gas. It also has a 44 percent stake in the nuclear plant near Bay City.

But the company's third wind farm in Texas is nearly completed, said Kevin Howell, president of NRG's Texas Region. And last year it partnered on projects in other states to create 460 MW of power using solar thermal energy, which concentrates sunlight to boil water and run steam turbines.